Some midsize companies, like MTM Technologies, are using social recruiting to attract better talent with lower recruiting costs by tapping employees' social networking contacts.

In a time of widespread layoffs, purchasing a tool to help manage a hiring process might seem like an extravagance to small and midsize companies. But MTM Technologies, a Stamford, Conn., provider of IT services, is still growing despite the recession and sees a way to justify the investment when others might not.

While large companies employ internal or external recruiters to scout job bulletin boards and social networks for talent, small and midsize companies typically lack dedicated resources and the budget to engage in extensive searches. In fact, most small and midsize firms don't use full-featured applicant tracking systems (ATS) -- they often rely on spreadsheets or small databases. Like many small and midsize businesses, MTM Technologies works with a third-party payroll service -- it uses Ceridian. Ceridian's products include a recruiting system that MTM used, says Michael Kerrigan, VP of HR operations at MTM. "We bought everything hook, line, and sinker," he says, "but we had major problems."

Looking for alternatives, MTM Technologies, a company with 470 employees spread across 26 states, saw that an ATS called Jobvite might provide a more cost-effective way to manage its hiring process. Jobvite farms employee connections, looking to harvest qualified candidates for open positions across job boards, social networks, and e-mail contacts. The technology, which is software as a service (SaaS), helps automate the type of word-of-mouth-style marketing that's a building block of social media.

"The beautiful thing about Jobvite is it interacts with all employees," says Kerrigan. "We post a position, and it goes out and hits these other Web sites but also gets sent to managers, friends, and co-workers." By "interacts with all employees," Kerrigan is referring to the fact that employees are asked to share some of their personal or professional connections with the company. Jobvite takes it from there -- maintaining their privacy. Unless the candidate opts to receive a contact from MTM, Jobvite doesn't store his or her contact information.

By involving employees such as Chris Chrobocinski, VP of National Service, MTM Technologies expands its reach to find more suitable candidates than it would on a job board. Chrobocinski, who has been with the company for 12 years, says he logs on to Jobvite to send a note to a contact who may be appropriate for an opening. If the contact applies for the job, then Jobvite prompts Chrobocinski to share feedback about the candidate. Employees are encouraged and often incentivized to participate. But there's another form of motivation for them as well: If you can find an acquaintance a job, you have won a friend -- or at least a useful contact -- for life.

More Efficient Applicant Identification And Tracking

The administrative task of tracking applicants through a hiring process is a necessary expense for many companies, especially those that do business with government agencies. It's also a means to measure the return on investment of hiring recruitment efforts. But with the advent of social networks, where vacancies can be "socialized" among personal and professional connections, managing a recruitment campaign requires a different type of software solution.

"The thinking was that more and more people maintain these social networks, invest in them, and therefore there are ways to find high-quality candidates without necessarily having to advertise for the job," says Dan Finnigan, president and CEO of Jobvite.

For MTM, reducing its spending on job boards is a key part of the return on investment in Jobvite. The key is filling positions before resorting to posting vacancies on job boards. One study indicated earlier this decade that companies spend about $4,500 to make a placement via advertisements or recruiters. Exempt employees can cost more than $12,000 according to the Saratoga Institute. "But if you make a hire through a referral it's around $1,000 [cost to the employer] and better quality," says Finnigan. "It's been proven in studies that the referred employees last longer, churn less, have higher satisfaction, and perform better."

Jobvite contends that employee contacts do not perceive the job-related e-mails as spam because they come from a known person, and often, if they're not interested in a job, they will refer it to someone else they know who may be interested. If a candidate responds to the hiring manager, both that person (who usually conducts an interview) and the referring employee are notified.

Privacy concerns weren't a major stumbling block for MTM's Kerrigan. Other customers or their employees may feel differently. Most people have personal and professional connections, yet there are some you wouldn't suggest for a job opportunity in your organization.

Social media, such as a social network, is still a relatively new technology for many workers. Jobvite readily concedes that younger workers are the ones most likely to know their way around Facebook, MySpace, or LinkedIn. Younger workers, says Kerrigan, are likely to be "walking into your company with an established network" of connections. In other words, they're also the ones more likely to be comfortable with the concept. Of course, employees of all ages are encouraged to participate, even if inexperienced social networkers are less likely to quickly grasp what is being asked of them.

"I think this application has the potential to truly change the relationship between social networks and online job searching," says Joanna Lord, co-founder and chief marketing officer of TheOnlineBeat.com, a job search engine. "It takes the viral, personal, and communicative strengths of a social network and puts them to good use for both employers looking to hire and the job searchers themselves."

But Lord also sees some drawbacks to it. "I see potential for some spamming issues," she says. "Especially when you consider that Facebook networks have largely become diluted due to their 'Add a Friend' connector feed. Many friends are not friends at all, leaving me to wonder how many times a day I will be messaged with a new job opportunity. Also the applications are not necessarily geographically targeted, therefore irrelevant job postings (for those not willing to relocate) could be forward by their so-called friends. Lastly, I wonder if this will become an abused tool by recruiters. Will we see a surge in recruiters adding fluff network connections in order to expand their potential match list?"

Entering details of the vacancy into the software, a hiring manager at MTM Technologies sets off a chain of events, says Kerrigan. "We post a position, and it goes out and hits these other Web sites [including job boards] but also gets sent to managers, friends, and co-workers," he says. It's a streamlined process that suits an organization without dedicated recruiters.

The question of employee privacy apparently hasn't been a concern at MTM Technologies, says Kerrigan. The product doesn't monitor employee use of social networks, for instance. Beyond that, "we don't know anything the employee hasn't chosen to reveal," says Jobvite's Finnigan. "It starts with the employee making the choice to upload names and contact info for people they think are relevant for a particular job."

According to Kerrigan, the company's expected return on investment for Jobvite is between four and six months. A key driver of the savings comes from the fact that MTM Technologies no longer has to post as many jobs on Monster.com because "socializing" jobs through Jobvite obviates the need to post them on a board. Consider that a single job posting for two weeks starts at $1,000, according to Monster.com.

Although the economy is blunting many companies' hiring plans, Jobvite is banking on customers choosing to deploy the software to save money and improve a critical business process. MTM Technologies is continuing to hire at the rate of four to 10 people a month, says Kerrigan, filling or adding sales-generating positions called engineers. Word is spreading quickly about open jobs, and positions are filled faster than ever before.

Although Jobvite applies automation to tasks that recruiters have traditionally kept to themselves, at least one recruiter is impressed by the time savings possible with the tool. "The development of a tool/technology that allows a recruiter to quickly handle the hiring/recruiting process, from front to back, will be a great advantage," says Shayne Libby, senior recruiter, sales for NetSuite. Libby says it promises "Great time savings and improved process flow for compliance and audit trails.

How To Socialize A Job Opening

Can employees publicize a job opening without using a tool such as Jobvite? The short answer is yes, but you wouldn't want them to do it that way. Here's why: Hiring is an important business process that needs to be managed, just like paying bills or payroll. Using an applicant tracking system (ATS) such as Jobvite (or others from Taleo, Cats, or Power Recruiter), an organization can keep a trail of exactly where and how long a job is posted, how many candidates apply, and from which sources (through a careers site or from a job board, for instance). And an ATS can track a social media campaign -- how many employees contributed contacts, how many responses were received -- and employees can be rewarded when a vacancy is filled based upon their recommendation.

Jobvite is intended to make it easy to "socialize" job openings -- not just for employees but also for anyone who sees a job listing and wants to spread the word via social media. "On all of our customers' career sites there's a widget that says 'Send Jobvite,' " says Jennifer Overholt, director of product marketing at Jobvite. "Anyone who visits that career site can send a job invite to any of their contacts on Facebook, LinkedIn, or Twitter. From LinkedIn you can send a message directly to any first-degree contact. In Twitter you can send a broadcast tweet or a direct message to contacts."

Rusty Weston is a San Francisco-based journalist who blogs for My Global Career and directs Third Set Media.